Question

On December 31, 2016, Carla Company issues 170,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $8. The fair value of the SARs is estimated to be $4 per SAR on December 31, 2017; $1 on December 31, 2018; $8 on December 31, 2019; and $6 on December 31, 2020. The service period is 4 years, and the exercise period is 7 years.

Part 1

Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan. (If the compensation decreases from prior year enter the amount as a negative number in the table e.g. -25,000 or (25,000).)

Date		Fair Value		Cumulative Compensation Recognizable		Percentage Accrued			Compensation Accrued to Date		Expense 2017		Expense 2018		Expense 2019		Expense 2020
12/31/17		$enter a dollar amount		$enter a dollar amount		enter percentages	%		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
									enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
12/31/18		enter a dollar amount		enter a dollar amount		enter percentages	%		enter a subtotal of the two previous amounts		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
									enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
12/31/19		enter a dollar amount		enter a dollar amount		enter percentages	%		enter a subtotal of the two previous amounts		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
									enter a total of the two previous amounts		enter a total of the two previous amounts		enter a total of the two previous amounts		enter a total of the two previous amounts		enter a total of the two previous amounts
12/31/20		enter a dollar amount		enter a dollar amount		enter percentages	%		$enter a subtotal of the two previous amounts

eTextbook and Media

List of Accounts

Part 2

Prepare the entry at December 31, 2020, to record compensation expense, if any, in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

Answer 1

Percentage Compensation 10 Date Fair Value Cumulative Compensation Recognizable Expense Expense Expense Expense 2017 2018 2019 2020 Accrued Accrued to Date 680000 25% 170000 11 12 13 12/31/2017 14 15 12/31/2018 16 17 12/31/2019 -85000 1 170000 50% 170000 -85000 85000 935000 1020000 935000 1360000 75% 18 12/31/2020 1020000 100% 1020000 19 20 22 (b) Prepare the entry at December 31, 2017, to record compensation expense, if any, in 2020 Debit Credit 0 Account Title & Explanation Compensation Expense Liability Under Stock Appeciation Plan (To record compensation expense) 0